ORIGINAL RESEACH PUBLICATION SUBMISSION
[Medical Practice as a New Asset Class?]
By Ann Miller RN MHA
Academics and the financial services industry uses Modern Portfolio Theory [MPT] and the Capital Asset Pricing-Model [CAP-M] to make optimal investment allocations of different ‘asset’ classes to achieve a well balanced portfolio; according to some defined risk tolerance level or efficient frontier.
Equities, fixed income, real-estate, emerging markets, etc., are all asset classes into which investors, mutual, hedge fund or portfolio managers allocate capital. It is quite proper for them to do this as they seek to balance risk and potential returns.
And so, by creating a “new” asset class [medical practice], this concept opens the door to significant capital flows, advisory and management fees; if securitized-OR- at least help dampen portfolio risk for the individual physician executive investor.
As an example of this emerging new thought leadership, some consider Social Security income an alternate asset class; while others like Paul Merriman [from a [Seattle-based investment advisory firm and Western Washington University’s School of Business and Economics] suggest that it is not an asset class at all. The idea is fundamentally flawed and should not be a part of anyone’s portfolio.
Why? As classically defined, a financial asset is something that can be sold. Since Social Security cannot be sold, it has a market value of zero.
However, in as much as a medical practice can be sold, the definition of “asset class” appears corroborated. Thus, the proper valuation and income stream determination for this ‘new” asset class becomes paramount for investment portfolio inclusion.
PROGRESS: Un-gated white paper work-in-progress.
SUBMISSION: To the Journal of Health Care Finance: Editorial team: J. Cawley, M. Chalkley, M.E. Chernew, D. Cutler, M. Lindeboom and E. Meara, N. Elsevier, NY
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Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com
OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:
- PRACTICES: www.BusinessofMedicalPractice.com
- HOSPITALS: http://www.crcpress.com/product/isbn/9781466558731
- CLINICS: http://www.crcpress.com/product/isbn/9781439879900
- ADVISORS: www.CertifiedMedicalPlanner.org
- FINANCE: Financial Planning for Physicians and Advisors
- INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors
- Dictionary of Health Economics and Finance
- Dictionary of Health Information Technology and Security
- Dictionary of Health Insurance and Managed Care
Full Disclosure: I was interim editor of the Journal of Health Care Finance during the sabbatical of Founding Editor-in-Chief, James Unland PhD, about a decade ago.